Who needs to generate e-invoices under GST?
E-invoicing under GST is mandatory for businesses whose Aggregate Annual Turnover (AATO) has crossed ₹5 crore in any financial year from 2017-18 onwards. If you cross the limit, you must generate an IRN (Invoice Reference Number) and a signed QR code through the government Invoice Registration Portal (IRP) for all B2B invoices, exports, and credit/debit notes.
Importantly, once e-invoicing becomes applicable, it stays applicable even if your turnover later falls below ₹5 crore.
What counts towards the turnover limit?
Aggregate turnover is calculated on a PAN-India basis and includes taxable supplies, exempt supplies, exports, and inter-state supplies — but excludes GST itself. It is the highest turnover across any year since 2017-18 that determines applicability, not just the current year.
Which businesses are exempt?
Regardless of turnover, the following are exempt from e-invoicing:
- Banks, NBFCs & financial institutions
- Insurance companies
- Goods Transport Agencies (GTA)
- Passenger transport services
- Cinema / multiplex admission (tickets)
- SEZ units (SEZ developers are NOT exempt)
- Government departments & local authorities
Does e-invoicing apply to B2C invoices?
No. E-invoicing (IRN generation) applies only to B2B invoices, exports, and credit/debit notes. However, notified taxpayers must still display a separate dynamic QR code on B2C invoices.
A worked example: how to check your turnover
Suppose you run a design studio. Your PAN-India turnover was ₹3.2 crore in 2021-22, ₹5.4 crore in 2022-23, and ₹4.1 crore in 2023-24. Because the rule looks at the highest turnover in any year since 2017-18, the ₹5.4 crore figure in 2022-23 crosses the ₹5 crore limit — so e-invoicing is mandatory for you from the next applicable period, and it stays mandatory even though your later years are below ₹5 crore.
How e-invoicing actually works
A common misconception is that you create the invoice on a government website. You don't. You continue to raise the invoice in your own billing software, then report it to the Invoice Registration Portal (IRP). The IRP validates the data and returns three things that make the invoice legally valid:
- IRN (Invoice Reference Number): a unique 64-character hash for that invoice.
- Signed QR code: a digitally-signed code you must print on the invoice.
- Acknowledgement number and date: proof the invoice was registered.
The IRP also auto-populates your GSTR-1 and, where applicable, the e-way bill — which is one of the practical benefits of the system once you are covered.
What happens if you don't comply?
For a covered business, an invoice without a valid IRN is not a legal invoice. The practical consequences are significant:
- Your customer can be denied Input Tax Credit (ITC) on that invoice.
- Penalties can apply — broadly, ₹10,000 per invoice for a missing e-invoice, and ₹25,000 per invoice for an incorrect one under the general GST penalty provisions.
- Goods can be detained in transit if the invoice and e-way bill don't reconcile.
How to start e-invoicing once it applies to you
- Register / enable e-invoicing for your GSTIN on the e-invoice portal (einvoice1.gst.gov.in).
- Choose how you'll generate IRNs — the free government offline/bulk tools, your accounting software's built-in integration, or a GSP (GST Suvidha Provider).
- Map your invoice fields to the official e-invoice schema (INV-01).
- Start generating IRNs and printing the signed QR code on every covered invoice.
E-invoice vs e-way bill — they're not the same
An e-invoice is the IRN-validated tax invoice itself, required above the ₹5 crore turnover limit. An e-way bill is a transport document required whenever goods worth more than ₹50,000 are moved, regardless of turnover. Many covered businesses need both, and the e-invoice system can generate the e-way bill for you automatically — but they answer different legal requirements.
Frequently asked questions
Is e-invoicing based on current-year turnover only? No — it's the highest aggregate turnover in any financial year since 2017-18.
Does it apply to services as well as goods? Yes, the turnover threshold applies to both goods and services.
Once applicable, can I stop if my turnover drops? No. Once you cross the limit and become covered, e-invoicing continues to apply even if turnover later falls below ₹5 crore.
Do freelancers and small shops need it? Almost never — the vast majority are well below ₹5 crore and are not required to generate IRNs. You only need a standard GST-compliant invoice.
Below the threshold? You still need a proper tax invoice
If e-invoicing doesn't apply to you, you are not off the hook — you must still issue GST-compliant tax invoices with your GSTIN, HSN/SAC codes, and the correct CGST/SGST/IGST split. Use our free GST invoice generator to create one instantly, or read the full e-invoicing threshold guide for the details.